According to the Office for National Statistics (ONS), property price growth picked up pace in October, with indications showing that there has been a surge in buy-to-let property purchases ahead of tax changes that will affect the sector.
The news has raised industry fears that the UK property market is heading towards a collapse.
£287,000 is the average cost of a UK home after October’s 0.8 per cent value rise in October, while the annual rate of price growth has increased to 7 per cent, which is up from September’s 6.1 per cent figure and a 5.5 per cent rate in August.
The former chairman at the Royal Institution of Chartered Surveyors (RICS) – Jeremy Leaf – said: “‘These figures reinforce the findings of other recent surveys, demonstrating that the housing market is heading towards a boom and bust that the government is partly responsible for but said it wanted to avoid.”
ONS’s figures for October stated that average house price in England reached £300,000, whereas the figure for Scotland was at £196,000, while Wales and Northern Ireland recorded £174,000 and £158,000 respectively.
During the last year, price increases in the East of England have stood at 10.4 per cent, which is stronger growth than any other area of the UK, with the South East following closely behind with a 9.5 per cent jump and London recording 7.7 per cent growth.
From next April, buy-to-let landlords will have to pay an additional 3 per cent stamp duty, a charge that will also be applied to second home owners.
On a £250,000 property, this essentially means that investors will have to pay an additional £10,000 in stamp duty, rather than £2,500.
Combined with planned tax changes that will impact on buy-to-let properties, which will come into effect from 2017, there are fears that the rush to purchase investment properties could result in a property prices crash, if landlords all aim to sell at the same time.